POST OF THE DAY
Ford Motor Company
Re: Ford's Way Forward

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By GeezerRob
December 9, 2005

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

I've worked for some outstanding companies over the last 35 years, including GM, Ford and GE. Yes...at one time GM and Ford were great although perhaps not many on these boards remember. Let me share a few observations on these three titans with some thoughts on what may end up as fatal flaws of the car companies.

GE:
Not generally perceived as a marketing company, but it is one of its greatest strengths. It chooses markets to exploit based on analysis of the opportunities, learns what the customer needs and wants...as well as anticipating the needs and wants of the future. They also work to anticipate the competition and to counter them. These attributes exist not only at the top, but are infused into the front line troops.

GE is also well known for its quality efforts, recognizing them both as customer satisfiers and drivers for cost savings. Financially, the company has positioned itself to be a cash machine. From this vantage point, it can exploit the opportunities before it. While at GE, I saw frequent changes in organization and processes...to re-invent itself on it's own terms, not be pushed into change to save itself.

GE has one of the largest market capitalizations and has churned out profit increases, with few exceptions, on the order of 12-15% for quite a few years. Maybe the above characteristics contribute to their success...(Does the GE description also sound like Toyota by the way?).

GM:
I worked at GM in its strong days. Life seemed pretty good, but I was younger and more foolish then in many ways. I did notice, however, a late and poorly executed response to competition...the Vega. Later, at GE, I was a supplier to GM. The front line troops often didn't know what product features the competition had and couldn't recognize or accept a competitive advantage. It was an arduous task to educate them. It looks like this has turned around quite a bit, but...

The top management has often been criticized for overlapping products, outdated products, and poor quality products. No point in re-hashing here. Reorganization has been a hallmark at GM, but it has often been poorly conceived and poorly executed. Remember Roger Smith? While some ideas were good (Saturn), others, like the CPC/BOC divisional reorganization, nearly paralyzed the company. They still don't seem to be able to make the right choices: see current plant capacity/sales mismatch and UAW negotiations contract to contract.

Quality has made tremendous progress at GM, but it has a reputation that may take longer to live down than the company has. Financially, GM is supposedly looking at selling a major portion of GMAC. If they do, the company will enter a horrible downward spiral and I don't know if they'll be able to pull out. "Let's sell the one thing that makes money". Great idea....

Ford:
This company is strange. Tremendous resources and capability in its personnel, but an incredible capacity for self-deception and missing out on what the customer wants.
Marketing/product planning is...(putting it charitably)...spotty. Great job understanding the customer with Mustang. Ford Five Hundred...not so good. There WAS an attractive design, but the bland one won out to save a few dollars ("The Japanese do well selling bland cars. So can we because we're making such good product"). The design evolved to compete with Avalon (which it outsells). Management ignored the Chevy Impala ("it's not a competitor") ...guess which one is selling better? The Five Hundred and Freestyle are selling a fraction of the intended volume thanks to bland product that doesn't have the power that the market wants. Plans are in place to fix these deficiencies, but they won't be made for a long time yet. (Where's the urgency?)

Windstar/Freestar used to make a LOT of money for Ford. Thanks to an outstanding effort to not anticipate the competition, to make halfhearted moves to catch up, an ability to spend the better part of a billion dollars to develop a new version (Freestar) that can't be distinguished by it's predecessor (Windstar), coupled with a willingness to throw away a respected brand name...the vehicle will soon be killed. The other side is that the truck side of the business is very competitive and upcoming product appears to have some "hits".

There have been heroic efforts to improve quality, but it hasn't improved the last few years due to constant product changes in the effort to save money. (The amusing part is that warranty costs are up...duh...). There are now plans to only make product changes periodically so the assembly process can stabilize. We'll see. There is also so much pressure to meet cost reduction targets that important content is taken out, which top management denies (I don't think they are aware of what disappears year to year in the vehicles, but they DO notice if cost targets are met).

One of the craziest quality and self-deception examples was where a very aggressive quality target was set for a vehicle (a target that was well beyond Lexus and was also one Ford had never achieved). Every manager on the program promised to meet their part of the target (they had to or lose their position). The car started with four times as many defects as the target (better at that time than most Fords) and is now nearing the end of its product life years later...with more than twice the defects that were targeted years ago. What happened to those managers? Many moved on to other programs before <ahem> the defects hit the fan. Many were promoted. Nobody was held accountable.

Enough about quality...

Finances...at least Ford recognizes that sale of Ford Credit would be stupid. Too bad they didn't recognize it when they sold The Associates. The Associates was not a "car" business. All it did was make lots of money...a billion a year when it was spun off. Do you suppose that could help now? The Company is beset by too many MBAs that have too little experience coupled with too much authority (I have an MBA, but also have some experience).

Organization
New processes are constantly being rolled out...without first making sure they work in pilot form. These are often major obstacles to achieving the goal, causing wide spread chaos.

Many have been hired or promoted because they meet Corporate goals of advancing certain groups, not because they can do their job. (Ford has MANY VERY capable people in those groups, but a disproportionate share of them are unbelievable! Not a majority, but enough to be a problem). There is probably as much communication from upper management on diversity as there is on "The Way Forward".

Lastly, it appears that Ford has trouble attracting/holding top flight management, at least according to rumors. Bill Ford reportedly has tried to woo the leaders of Nissan/Renault and Daimler/Chrysler, but was unwilling to offer the top job. Ford employees hope the current head of "The Americas", Mark Fields, can turn the Company around before it looks like the opening scene of "Pirates of the Caribbean".

(The opening scene has Johnny Depp as Captain cruising into port on a sinking ship, stepping off onto the dock as the mast disappears into the depths). Very funny in the movie, not so funny if you're left on the ship, or if you're tossed overboard elsewhere in the harbor.


Become a Complete Fool
Join the best community on the web! Becoming a full member of the Fool Community is easy, takes just a minute, and is very inexpensive.